The financing, from the International Development Association, the World Bank’s concessional lending arm, is for the Local Development Investment Funds Project and the Additional Financing for the Urban Upgrading Project of Vietnam.

The WB said the first project is to improve effectiveness of local development investment funds in leveraging private sector financing for municipal infrastructure, and to strengthen the financial, technical, social and environmental safeguards management capability of the funds.

A WB statement said the bank will provide US$190 million in credit to boost the investment capital of qualified funds and support the Project Management Unit at the Ministry of Finance.

“The demand for municipal infrastructure in Vietnam has increased rapidly as the country copes with rapid urbanization, decentralization and high rates of economic growth,” Mr. Dang Duc Cuong, the project co-task team leader, said in the statement. He added, “This project, built on success of the model currently utilized in the Ho Chi Minh City Investment Fund for Urban Development’s development project, will develop infrastructure finance models that involve local institutions and leverage private capital.”

The US$160 million additional financing for the urban upgrading project will cover a financing gap for the projects in Can Tho, Hai Phong, Nam Dinh and Ho Chi Minh City resulting from high levels of inflation in 2007-08, said the WB.

In addition, the funding in Ho Chi Minh City will finance improvement of the Tan Hoa – Lo Gom Canal, which is a source of direct pollution and flooding in the basin.

“The urban upgrading project has been improving the living conditions of many cities in Vietnam, such as Can Tho, Hai Phong, Nam Dinh and Ho Chi Minh City, benefiting about two million poor people in these cities” Dean Cira, urban sector coordinator for the WB in Vietnam, said in the statement. “Through this additional financing, we hope that another 1 million poor people in Tan Hoa – Lo Gom canal area will benefit from better living conditions and environment.”